Walmart’s Outperform Rating Maintained at Evercore ISI

Evercore ISI analysts adjusted their price target for Walmart (NYSE:WMT) to $65.00 from the previous $182.00 following the company’s 3-for-1 stock split. The analysts continue to recommend an Outperform rating for the stock.

The analysts highlighted Walmart's strengths in attracting customers, improving margins, and investing in strategies to broaden its competitive edge. Walmart's commitment to value and a wide range of products is fundamental to its brand. The analysts believe that the integration of omnichannel strategies, technology-driven business models, and automation will catalyze growth.

However, executing these strategies in the unpredictable consumer environment of 2024 will be challenging. Despite a marginal setback in margins during the third fiscal quarter, Walmart has regained momentum, evidenced by a strong fourth-quarter performance and a 2024 outlook that exceeded expectations.

The projected 3-4% sales growth and 4-6% operating income growth for 2024 are seen as both cautious and achievable. The analysts suggest that with further development in Walmart's capabilities, normalization of product mix, shifts in business mix, and realization of productivity improvements, earnings before interest and taxes (EBIT) growth could accelerate to 8%. The expectation is that Walmart will enhance its margins in the coming year, driven by the growth of higher-margin sectors like media and fulfillment, the accumulation of automation benefits, and the easing of wage inflation.